China’s VIPKid raises funds at $1.5 billion valuation

Bloomberg

VIPKid, an online education company that matches Chinese students with North American teachers, was valued at more than $1.5 billion in a round of funding from investors including Sequoia Capital China and Tencent Holdings Ltd., according to people familiar with the matter.
The Beijing-based company said on Wednesday it had raised $200 million to expand into new markets and broaden its academic offerings, without disclosing any valuation. Its investors also include Sinovation Ventures, Zhen Fund and Jack Ma’s Yunfeng Capital.
VIPKid has seen explosive growth as Chinese parents seek out high-quality education for their children, particularly in English. The four-year-old startup has expanded to more than 20,000 teachers and 200,000 students, and projects revenue to reach $750 million this year. As part of the fundraising, VIPKid said it will begin offering Mandarin classes and target students in the US and beyond. Founder Cindy Mi said she anticipates reaching 1 million students by 2019 through expansion into new subjects and geographies.
“We’re not interested in building an after-school tutoring brand,” Mi, 34, said in an interview.
“We’re really interested in rethinking what learning will look like in the next 10, 20, 30 years.”
Today, VIPKid connects Chinese students from the age of 4 to 12 with teachers primarily from the US to study English, math and other subjects. Classes take place online and are typically two or three times a week for 25 minutes.
“When she had this crazy idea to go ahead and teach five-year-olds over the internet, no one believed this was possible,” said Robert Hutter, managing partner of the US venture firm Learn Capital, which has backed Mi.
“Obviously, she proved them wrong.” VIPKid’s event on Wednesday was held in a small ballroom downstairs from their future headquarters in East Beijing. Cheerleaders in miniskirts and gray-uniformed baseball players, a Chinese take on the American dream, greeted guests as they arrived.
“Every half year the performance exceeds expectations,” said Deng Feng, founding managing director at Northern Light Venture Capital. “Cindy will listen to you but she won’t totally listen to you. The best entrepreneurs never do everything you say.” Like every fast-growing startup in China, VIPKid faces a flood of competition.